Initial Coin Offering in Switzerland
Initial Coin Offering in SwitzerlandUpdated on Saturday 27th January 2018
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Initial coin offering (ICO) refers to a means of raising capital for cryptocurrency businesses. More specifically, it designates a procedure through which companies obtain funds through crowdfunding. ICOs in Switzerland are also referred to as Token Generating Events (TGEs), used with the purpose of generating new cryptocurrency.
The main market regulator for financial activities in Switzerland, the Swiss Financial Market Supervisory Authority (FINMA), observed that ICO activities are increasing in this country, most of them being carried out in the canton of Zug, which is considered the top destination for investments in virtual currencies. Our team of lawyers in Switzerland can advise on the Swiss ICOs, which are not currently regulated by a specific rule of law.
Main purpose of ICOs in Switzerland
Swiss ICOs were created with the main purpose of raising funds from the public. Although the legislation in Switzeland does not offer a complete framework for this type of activity, specific parts of ICOs are regulated by certain rules of law. For example, TGEs may be considered financial instruments if they qualify under the Article 3 of the Federal Law for Financial Services, as mentioned below:
• equity securities;
• units in collective investment undertakings;
Taxation of ICOs in Switzerland
Businessmen performing investments in Swiss ICOs can be taxed in this country depending on the rights they have in relation to the respective token. For example, if the rights are restrained only to the respective token and no additional rights are offered, the investor will be imposed with the wealth tax for tokens issued as a new form of cryptocurrency. Our team of Swiss lawyers can provide in-depth information on the tax regulations that may be imposed to cryptocurrency businesses.
If further rights derive from the Swiss ICOs – such as dividends, the token will be considered a virtual share, and the investor will be liable to income tax. However, the tax regulations for ICOs in Switzerland have not yet been established, as this field has recently emerged on the Swiss market and elsewhere. For the moment, the Crypto Valley Association is actively involved in setting up a code of conduct for ICOs activities.
Investors interested in this subject must know that most of the ICOs activities carried out up until this moment are used for raising capital for startup companies operating in the fintech sector. Businessmen may contact our law firm in Switzerland for consultancy services regarding this subject.